RBI Swap Facility Draws Nearly $41 Billion in Forex Inflows by End-July

The Reserve Bank of India's special concessional swap facility has attracted about $40.816 billion in foreign exchange inflows as of July 31, nearly doubling the roughly $20.718 billion recorded by July 17, according to the latest central bank data. The strong response reflects continued demand for the scheme, which the RBI designed to encourage foreign currency inflows and reinforce the country's balance of payments. Foreign Currency Non-Resident (Bank), or FCNR(B), deposits accounted for the bulk of the inflows at about $36.725 billion, while overseas foreign currency borrowings contributed around $2.575 billion. The RBI announced the facility on June 5 and made it operational from June 8, offering concessional swap terms to incentivise capital inflows at a time of global uncertainty and pressure on the rupee. The facility remains available for fresh FCNR(B) deposits until September 30, while concessional swaps for overseas foreign currency borrowings and external commercial borrowings can be used until December 31. Officials view the rapid uptake as evidence that the measure is helping to shore up external buffers.